Ties to stem cell board lucrative

The panel of scientists reviewing grant requests at California's stem cell funding agency didn't like the proposal submitted by UC Irvine Professor Frank LaFerla and his partner, a biotech company.

LaFerla and the company were asking for $20 million to further his work looking for a treatment for Alzheimer's disease. The scientific reviewers questioned whether the huge taxpayer investment had any chance of paying off. They explicitly said it lacked a scientific rationale. They also said the project's estimated cost appeared excessive.

That didn't matter, however, to the governing board of the stem cell agency, which is dominated by members from the University of California system, including two professors from UC Irvine.

In September, the board voted to reverse the decision of its panel of scientific experts and approve the proposal of LaFerla and his partner, StemCells Inc., which is headquartered in Northern California.

It wasn't the first time that questions have been raised about the grants awarded by the board of the agency officially known as the California Institute for Regenerative Medicine. The agency was created by voter approval of Proposition 71 in 2004. It is distributing $3 billion from California taxpayers to stem cell researchers in the hope of discovering promising new cures for Parkinson's, diabetes and a host of other devastating diseases.

Repeated independent reviews of the agency, including one by the Institute of Medicine released this month, have found that its board is rife with conflicts of interest.

In fact, of the $1.7 billion that the agency has awarded so far, about 90 percent has gone to research institutions with ties to people sitting on the board, according to an analysis by David Jensen at the California Stem Cell Report, which closely follows the agency's operations.

“The kind of conflicts that exist now are very direct and very major,” Howard Shapiro, a Princeton professor and chairman of the panel at the Institute of Medicine, warned the board at its meeting last week.

The sums expended have been unprecedented: No other state has spent so much on stem cell research so quickly. But it will be years, if not decades, before taxpayers know if their money – a total of $6 billion when the agency's bonds are repaid – has resulted in new treatments.

What's clear already is that the money has transformed stem cell research in California and poured hundreds of millions of dollars into the state's universities, including UC Irvine.

Before Proposition 71 passed, UC Irvine had less than 10 stem cell scientists, who received about $1.5 million in funding each year. Now, after receiving $100 million in grants from the state agency, the university has 60 scientists working to advance stem cell research and teaching. It touts itself as one of the top stem cell research centers in the world.

In 2010, it opened an $80 million, four-story stem cell research center, with the agency picking up $27 million of the cost.

As UC Irvine has won increasing amounts of taxpayer money, its two professors who sit on the agency's board have risen in status on campus.

Professor Susan Bryant, an expert in regenerative medicine, was dean of the School of Biological Sciences when she was named to the agency's board in 2004. She was then promoted to vice chancellor of research. In July, she was named the university's interim executive vice chancellor and provost, its second most powerful administrator.

When Professor Oswald Steward, a stem cell scientist, joined the agency's board in 2004, he was director of UCI's Reeve-Irvine Research Center for Spinal Injury. Since then, the scientists working in his center have received millions of dollars in grants from the agency. In May, the university rewarded Steward with an additional title: senior associate dean of research for the School of Medicine.

Board members don't vote on the grant proposals submitted by their own institutions. But the agency's critics have repeatedly pointed out that the employees of the research institutions sitting on the board have an indirect conflict of interest. The critics worry that these board members may not be objective in their agency work knowing that a promotion could be in store.

“Their careers at UC are helped by bringing money in,” said Marcy Darnovsky at the Center for Genetics and Society, a group in Berkeley that has studied the agency's structure. “To us, it seemed an unfortunate part of the agency's governance mechanism.”

The two professors are prohibited from receiving any agency funds for their own scientific work. But so much money has been funneled into the stem cell field in California that it can be difficult to show their continued scientific efforts are not somehow benefiting.

For example, Bryant co-authored a scientific article in 2009 with nine other scientists about the genetics of salamanders, which can regenerate limbs. In the report, the group recognized the state agency for partially funding their work. Bryant said that the money was received by another scientist in the group who was not employed by UC Irvine. She said the state agency has never given a grant for research involving salamanders. “I have never, ever benefited from CIRM funding,” Bryant said using the agency's acronym.

Steward said he stopped his stem cell research when he joined the board in 2004. His board position, he said, “has prevented me from taking on lines of research I otherwise would do.”

Tom Vasich, a campus spokesman, said Bryant and Steward's positions on the agency's board played no part in their promotions and success at the school.

Four other UC schools have received more funding for stem cell research from the agency than UC Irvine. Stanford has received $267 million – the most of any institution. All of these schools have at least one representative on the board.

The stem cell agency operates like few other government institutions. Language in the ballot initiative required that at least 13 of its 29 board members come from UC and other institutions that perform stem cell research. Three other UC officials, including Steward, were appointed to board seats reserved for patient advocates.

In its review, the Institute of Medicine panel urged that the board be restructured to include a majority of members who have no direct personal or professional interests that might bias their decisions. “Far too many board members represent organizations that receive CIRM funding or benefit from that funding,” the panel said. “These competing personal and professional interests compromise the perceived independence of the (board), introduce potential bias in the board's decision-making, and threaten to undermine confidence in the board.”

Kevin McCormack, the agency's spokesman, said the agency has strict policies to prevent board members from even advocating for a grant request from scientists at their institutions. He noted that the institutions receiving the most state stem cell money also receive large amounts of federal research funds. “The reason is simple,” he said, “these are the institutions that have the best researchers carrying out the most successful research projects.”

The Institute of Medicine report specifically criticized the agency's method of allowing applicants to appeal their case to the board if their projects were rejected by its team of scientific reviewers. In September, UC Irvine scientists won $40 million in grants through these “extraordinary petitions,” including the $20 million won by LaFerla and StemCells Inc.

The scientific reviewers had first turned down the request by LaFerla and StemCells Inc., questioning how a localized injection of human neural stem cells into the brain's hippocampus could even treat a diffuse disease like Alzheimer's.

But the project had many advocates. Stemcells Inc. was co-founded by Stanford Professor Irving Weissman, one of the most outspoken supporters of Proposition 71. Another supporter was Bob Klein, a wealthy real estate developer from Northern California who drafted the proposition and headed the political campaign that worked to win its approval. Klein made sure the agency would be insulated from political interference by including ballot language requiring a 70 percent vote of both houses of the state legislature to change its structure. He served as the agency's first chairman until he stepped down in June 2011.

In July, Klein appeared before the board, urging it to approve LaFerla's project. The board then voted to send the grant back to its scientific review team, which is made up of stem cell experts from outside California. The scientists again denied the petition, noting that so far LaFerla's published data had shown how the memory of mice appeared to improve with an injection of neural stem cells from mice. Injecting human neural stem cells into mice, which is what the team proposed, is a much more difficult task. They noted that an article that LaFerla had written to support his work had been held up by editors at a journal who were asking for major revisions.

On Sept. 5, the agency's board overruled the scientific review team and approved the grant.

In an interview, LaFerla remembered how once he had believed that stem cells were an unlikely treatment for Alzheimer's. He said he had changed his mind as he saw positive results in the mice in his lab. He said he disagreed with the agency's scientific reviewers' claim that his proposed research lacked a scientific rationale.

“Who can make such an audacious claim,” he said, “without allowing the experiment to be done?”

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